July 2011

Today's commentary references a 1280.50 retracement target that first appeared in the tout section a while back.  It is still viable, not only as a downside price objective but as a place to try bottom-fishing.  Officially, we'll attempt to "camo" our way into the trade, looking for the turn if and when the futures fall to, oh, 1282.20.  But if you want to take an easier though somewhat riskier course, try bidding 1280.50 with a 1279.75 stop-loss. _______ UPDATE (12:28 a.m. EDT): The futures have gone the "wrong" way today, but the rally has in no way altered the picture of summer tedium that this morning's commentary describes. The so-far intraday high at 1316.00 has exceeded one external peak on the 240-minute chart, but it will take a print at 1323.50 today or tomorrow to exceed the second that would be needed to provide even minor relief from fecklessness.

What a swoon!  Chartists can be pardoned if they had serious doubts about the long-term bull after the futures plunged in late May. However, the sensational recovery has put them on track for a shot at 126^05.5,  and this has become even more likely in the wake of the consolidation now taking place above a 124^00 midpont resistance.  The feeble k-A segment relative to the large B-C pullback makes the target itself less than ideal for trading, but it will serve just fine as a minimum price objective for the next thrust.

A longstanding target at 85.51 that we'd just about given up on is still in play, implying that camouflageurs looking to get short from near these levels might enjoy a small edge. Camouflage is essential in any case, since shorting crude implicitly discounts geopolitical risks that could send quotes soaring on any given day (or night). ______ UPDATE (July 26, 1:56 a.m.): We'll forget about this one for a while, since crude seems to be enjoying frightening the energy-using world by frolicking near $100.

September Copper appears to be consolidating above a 4.3825 Hidden Pivot midpoint for a possible moon shot to 4.8925.  Some savvy observers of the global investment scene evidently believe that the strength in this metal presages an upswing in the global economy, particularly in China, but we're not so sure ourselves.  Perhaps it is just hedging against further weakness in the dollar?  In any event, the technical case for significantly higher prices looks compelling, especially considering that the recent peak at 4.4565 exceeded April 21's "external" high by a few ticks.

Although our bullish outlook for stocks remains unchanged, the 900-point Dow rally we projected in late May hasn’t been the quite romp we were expecting. In fact, springtime’s tiresome ups and downs appear to be continuing into summer, and it now seems possible this behavior could persist well into August.  If so, the risk of financial loss will be lower in the coming weeks than the risk of being bored half to death. Yesterday’s price action underscored the stock market’s reluctance to do much of anything, even when conditions seem right.  Such as Sunday night.  For a rare change, it looked like the slimeballs who control stocks in the off-hours were on the ropes. Usually, they take shares down as far as possible Sunday evening in order to exhaust sellers just ahead of Monday’s opening. This allows Them to short-squeeze stocks ahead of the bell, catalyzed by virtually any crumb of news that could be construed as even remotely positive. This time, however, with index futures getting pounded overnight, the familiar stage-managed rebound was nowhere in sight.  Stocks in fact continued their fall for the first few hours of Monday’s session, with the Dow down by almost 200 points at the lows.  Then, just when it looked as though DaBoyz might get trampled, shares suddenly reversed and headed north, recouping half the day’s losses by the final bell. So how might the markets continue to bore us in the weeks ahead? For starters, we expect yesterday’s weakness to resume, bringing the September E-Mini S&P down to at least 1280.50 today or tomorrow.  With the futures trading for around 1301.00 as of this moment, the implied 20-point drop would spell a relapse of about 160 points for the Dow Industrials.  We’d be cautious buyers at that level, using the Hidden Pivot

Over the weekend Rick was a guest on The Korelin Economic Report, where he and Al Korelin discussed solutions to the US debt ceiling. Click here for the audio.

Like physical gold, GORO has recoiled sharply from the brink to spit fire once again. Although a 19.20 downside target given here earlier will remain valid in theory until such time as 28.70  (aka point 'C') has been exceeded, the stock as a practical matter is out of trouble. Furthermore, today's gap-up rally has created a robust impulse leg on the 180-minute chart that all but guarantees buoyant prices for the near- to intermediate-term. The rally as of this moment is within easy distance of racking up yet another daunting "external" peak before the day is over, which if accomplished would further buttress bulls.

Price action on Sunday nights is so heavily manipulated and predatory that you can usually bet it will be reversed by Monday's opening bell. Be that as it may,  the trends appear felicitous as of around 8:30 pm EDT. August Gold is up 6.70, correcting off a 1599.20 (all-time!!) high, and the E-Mini S&Ps are down 6.50 points -- seemingly attuned, even if only momentarily, to the realities of a lame economy rather than to the wantonly haphazard flow of OPM.

The Gold Bugs Index is nicely on track for a test of April's all-time high near 609 -- a move of nearly seven percent from these levels.  Notice how each of the last two thrusts on the 240-minute chart have been impulsive -- exactly what we should expect of a rally gearing to punch through an old top. The rally is impulsive on the weekly chart as well, further corroborating a picture of power percolating below the surface. Most immediately, a print at 570.37 would trip a conventional entry signal tied to a 604.70 target and a 581.81 Hidden Pivot midpoint resistance.